Insurance claims from hazards associated with business are completely equal-opportunity…it doesn’t matter what size the business is, claims do not discriminate. Small businesses are vulnerable to large claims and need to be protected just as much as a big company.
In my many years working with business owners of large and small companies, one thing rings true…they all need solid insurance and risk management practices. I have listed several key areas that a small business owner may consider when reviewing their current business insurance policy or obtaining their first one.
1. Values – The amount something costs to replace is a key to obtaining the correct level of insurance. Too little or too much translate into reduced recovery after a loss occurs or higher premiums. Taking the time to have an appraisal of property values is the best way to minimize this mistake. Do not assume that the values from last year’s insurance policy are accurate to the conditions your business faces today.
2. Exclusions – When it comes to a claim, what matters most is not necessarily what an insurance policy will cover, but what it will not cover…look and understand the EXCLUSIONS on your policy. A commonly overlooked section of commercial insurance policies for a buyer is the exclusion section. Here you will find, clearly outlined, what the insurance policy will not cover. Understanding the exclusions section is another key to breaking the code of insurance policies.
3. Business Interruption/Extra Expense – What? This is the amount that an insurance policy will pay out in the event a covered loss shuts down your business and requires an alternative means of operation and additional monies to continue. Again, a critical area to be taken seriously is the best assumption of how long your business will be out of service and the associated value of that time. Although it may be a bit of a task, take the time to properly evaluate the income levels and associated expenses of a shut down. In my experience, I see a large percentage of businesses under insured in this area.
Now, go pull your current file for your customer’s business insurance policy and read it! Take a look at the sections I mentioned and ask yourself if you should consider talking with your customer and proposing changes or modifications.
gmunderwriters 